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I noticed on my past installment accounts that after 12 months I paid it off. Then the account status is "paid or paying as agreed" The remarks say "closed"

Does this hurt my credit scores? I have heard and read something on this. Should "closed" be open to make a higher score or is this not relevant in the scoring?


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When an account is in good standing and closed, that means that the clock starts for how long that good tradeline will continue to help the credit scoring. It will continue 10 years from the closed date.

So by closing the account, you stem off the time line that it helps the scores and the history of the credit report.

Another thing is that closed accounts, will no longer contribute the credit limit available.

Like if you have $10,000 amount 5 cards that each has $2,000 credit limits - if you close 2 of them 5 accounts, then you just limited your total available credit limit to only $6,000. And that can hurt your scores if the 3 remaining accounts have higher balances amoung them.

Instead of keeping 5 cards with lower balances spread out amoung them.

That is how open helps your credit score.

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Zero balance just means that the account is not actively contributing to the scoring on the utilization factor; but there are still other factors which it can affect.

Five basic factors:

1. About 35% is affected by the payment history, usually the last 2 years contribute the most to the scores - the older the delinquency the less it is hurting. Example would be that a 30 day late a month ago would hurt your score more then a collection account 5 years ago.

2. About 30% is affected by the utilization this is the balance divided by credit limit = percentage. Prime is around 30% on utilization, if you keep it below this your scores will be the best for this factor. And they say that the account should maintain a balance to be actively affecting this factor. Even if it is just $50 carried over, this will help your scores.

3. About 15% is affected by length of established history, the older the account is and currently open the better. Creditors like seeing long term relationships - to them it shows loalty and they are more likely to want your business.

4. About 10% is affected by inquiries and new credit, as the saying goes, don't apply for it if you don't need it. That is so true, cause the more inquies you get added to the credit report it will start dragging your scores down, especially if you don't have much of a credit file to begin with. 10% don't seem like much but ever point counts and can mean the difference in what you are able to obtain later on for future loans.

5. About 10% is affected by mix of credit, they say you should not have more then 3 or 4 credit cards. If so you might consider installment loan with local bank or credit union. You want to mix what you are using evenly to get extra points here.

Now these guideliness are not set in stone, you can break any of the given rules to improve on the factors that pay out the best on points to be obtained. Like example would be to have multiple cards exceeding 3 or 4, but you keep you usage of debt to below 30% amount these cards and this will drive up your utilization factor. So it is like a chess game knowing what to move here and what to more there for the best results.

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